Clearing and settlement: first meeting of
Commission expert group on fiscal compliance issues

The European Commission’s Clearing and Settlement Fiscal
Compliance (“FISCO”) expert group is holding its first meeting in
Brussels on 15 April 2005. The group, chaired by the Commission, will advise on
the removal of fiscal compliance barriers to the clearing and settlement of
cross-border securities transactions within the EU. It is composed of 15
high-level experts, mainly from private bodies.

Internal Market Commissioner Charlie McCreevy said: “"The FISCO Group
will have an important role to play in helping to tackle the fiscal barriers.
This is an area that was highlighted by the group of financial experts chaired
by Alberto Giovannini, as one of the obstacles to more efficient pan-European
cross border clearing and settlement in securities. This is important in the
context of deepening financial market integration.”

Clearing and settlement takes place after two parties have agreed a
securities transaction, in order to allow the transfer of ownership and of the
corresponding payment. Systems in the EU have developed nationally, as
cross-border trading activity has been limited. Cross-border clearing and
settlement in the EU is therefore still much more costly and complex than within
a single Member State or in the United States, to the detriment of the EU's
financial markets. Different fiscal regulations in Member States are a
factor in this fragmentation and the group will advise on ways to remove these
barriers, identified in the Giovannini reports (http://ec.europa.eu/economy_finance/giovannini/clearing_settlement_en.htm)

and by respondents to the Commission’s April 2004 Communication on
Clearing and Settlement (IP/05/346).
The Communication includes an action plan outlining various initiatives to
achieve an integrated, safe and efficient clearing and settlement environment
for securities trading in the EU, based on a level playing field for the
different providers of services.

The group will look at alternative ways for Member States to secure their tax
receipts, while permitting all financial institutions across the European Union
to compete on an equal footing. It will produce a study assessing whether
national fiscal compliance procedures could be more closely aligned and whether
the multiplicity of rules which raise the cost of cross-border settlement could
be eliminated or substantially reduced. The group may also identify other
relevant issues.

It will liaise with two other expert groups - the CESAME group on market-led
initiatives to bring down barriers to integration and the Legal Certainty Group,
which tackles legal barriers - as well as with the “Group of 30” and
other international bodies.

The group will conduct its work openly (up to date information will be
available through its website) and in line with the Commission’s work in
the area to date. The work is expected to take about two years.

The Commission will use the findings as a basis for discussion with the
Member States in accordance with the established policy of prior consultation on
tax issues. If subsequent action at EU level is considered appropriate, the
Commission will bring forward proposals.